FURTHER REFORM OF CAPITAL GAINS TAX

That this House believes in fair taxation and firm measures to minimise tax avoidance; is concerned, therefore that, following the Budget, Capital Gains Tax (CGT) will still be levied at 18 per cent., which is lower than the top and standard rates of income tax; notes, too, that the annual exemption from CGT for 2009-10 will be £10,100, considerably more than the personal income tax allowance of £6,475; recognises the moral and financial imperative which led to reform of CGT in the 2007 Pre-Budget Report, raising rates from a minimum 10 per cent. and abolishing taper relief, a tax break which had cost the public purse over £28 billion in just seven years; considers, however, that the reforms have still not gone far enough, as wealthy people will still pay lower rates on unearned income than office cleaners on hard-earned low wages; believes, too, that the continuing discrepancy in rates constitutes a major incentive for tax avoidance; further notes Treasury estimates that taxing capital gains at the individual's marginal rate of tax would raise around £2 billion for hard-pressed government finances; notes further that the annual exemption allowance from CGT costs the Treasury another £2.4 billion; and urges the Chancellor of the Exchequer, therefore, to bring forward measures in the 2009 Pre-Budget Report or sooner to equalise CGT with the marginal rate of income tax, as was the case before 1997, and to consider merging the dual exemptions into a single allowance encompassing earned and unearned income.